SOUTH KOREA Law and Practice Contributed by: Jeena Kim, Kyunghwan Lee, Eunyoung Row and Bochan Kim, Bae, Kim & Lee LLC
dations associated with the President’s confidante. The independent counsel determined that these con - tributions constituted acts of bribery aimed at secur - ing business favours, and subsequently charged the implicated parties with offences including bribery, embezzlement and perjury. The legal proceedings concerning the foregoing extended over approximately four years, during which both the President and corporate leaders were convicted of bribery. The case had profound societal repercussions, intensifying public demand for ethical corporate practices and underscoring the necessity of robust compliance frameworks within large cor - porations, as evidenced by the scrutiny and reforms prompted during the trials. In 2025, another corruption scandal implicated former President Yoon Suk Yeol’s wife, which centred around allegations that she accepted luxury gifts in exchange for political favours. The case is currently being inves - tigated by special prosecutors. 7.6 Level of Sanctions Imposed Korean investigative and enforcement authorities are adopting a strong approach towards combating brib - ery. Once investigative leads are obtained, there is a high likelihood of indictment, and when bribery and corruption are proven, the courts impose substantial penalties for these crimes. See 5.1 Penalties on Con- viction with respect to specific legal penalties. According to Article 542-13 of the Commercial Act, companies of a certain size (total assets of KRW500 billion or more) must establish “compliance stand - ards” and appoint a compliance officer who meets specific qualifications (such as being a licensed attor - ney) to ensure the implementation of these standards. The compliance standards include matters related to legal regulations and procedures that employees must follow in their work, as well as systems for education and monitoring to prevent and address violations of the law by employees. 8. Compliance Expectations 8.1 Compliance Obligations
There is no direct criminal penalty for violating the obli - gation to establish compliance standards or appoint a compliance officer. However, if the company suffers damage due to the failure to establish an adequate compliance system, shareholders may file a lawsuit for damages against the company’s directors, claim - ing that they failed to fulfil their duty of loyalty and care by not establishing and operating an internal con - trol system. Recently, courts have shown a tendency towards increasingly recognising director liability in such cases. Such trend is expected to be strength - ened, as the recent amendment of the Commercial Code specifically prescribed that the director’s duty of care and loyalty shall be extended to the share - holders as well as the company. It is understood that shareholders may directly claim damages against the directors for the failure of establishing an adequate compliance system. The sentencing guidelines for bribery-related offenc - es in South Korea do not explicitly recognise the implementation of a compliance programme within a company as a mitigating factor. South Korea has a sentencing committee under the Supreme Court that provides standards reflecting the nature of each crime. While these standards are not legally binding, if a judge departs from them, they must justify the decision in the judgment. There have been cases where the courts considered the presence of a compliance programme when deter - mining the sentence. For instance, as noted in 7.5 Recent Landmark Investigations or Decisions , the court acknowledged that the decision of the head of a large corporation to strengthen the compliance moni - toring system after the offence should be viewed as a “post-offence circumstance”, which is one of the factors to be considered under Article 51 (4) of the Criminal Code. However, the court also emphasised that, for a compliance programme to be used as a mitigating factor, its effectiveness must be thoroughly proven. In this case, the court found that the compli - ance programme had not been demonstrated to be effective, and thus could not be considered a mitigat - ing factor.
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